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Referendum Aftermath: Here's My Trading Plan

ByRyan Mallory
Published 07/06/2015, 07:50 AM
Updated 07/09/2023, 06:31 AM

Technical Outlook:

  • Thursday's price action was marked by a bearish engulfing candle pattern on the SPDR S&P 500 (ARCA:SPY) chart.
  • Today's action will be swayed by the "NO" outcome on the Greek Referendum vote.
  • About 60% of the overnight losses have been recovered. The lows were established at the Sunday night open and have rallied since.
  • Lots of headline risk still exists for SPX as you have the aforementioned Greek "NO" vote, Varoufakis resignation (finance minister), China's plunging market, future Fed interest rate hikes, and upcoming earnings that start this week with Alcoa (NYSE:AA).
  • The market gap down last night following the vote seemed to easy to me, and I'm not at all surprised to see futures trying to rally back here.
  • With that said, the price action through last Thursday points to a fizzled out dead cat bounce that wants to resume the downtrend again.
  • VIX rose on Thursday by 4.4% to 16.79. Still very elevated.
  • T2108 (% of stocks trading above the 40-day moving average) shows signs of resuming the downward trend at 29%.
  • 30 minute chart of SPX looks a bit sloppy following the massive sell-off that occurred last Monday. At this point there isn't much to work with there.
  • 200-day moving average is back in play today at 2054.
  • Bears need to get price back below Monday's lows to re-inspire the Bears, while the Bulls need to climb back and over Thursday's highs, for starters.
  • The headline risk is extremely volatile at the moment, and conditions are rapidly changing at the whims and discretion of politicians seeking to hold on to power.
  • 2039 is another major support level to watch here.
  • The market doesn't care about the economy nor earnings. That is not what is driving it. The market cares about what the Fed is doing to keep equities propped up.

My Trades:

  • Covered Jarden Corporation (NYSE:JAH) on Thursday at 51.70 for a 1.2% gain.
  • Sold ProShares UltraShort S&P 500 ETF (ARCA:SDS) on Thursday at 20.76 for a 0.1% loss.
  • Covered 3M Company (NYSE:MMM) on Thursday at 155.30 flat.
  • Did not add any additional positions on Thursday. Cashed out ahead of the Greek Referendum. See my post,Why I Went 100% Cash Ahead Of Greek Referendum, to learn more about my rationale for doing so.
  • 100% cash.
  • Will look to add 1-2 new positions today to the portfolio.

Chart for SPX:

SPX Daily

original post

Latest comments

Well done.
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